<PAGE>
EXHIBIT 10.17
FISCAL YEAR 2005
EXECUTIVE BONUS
PLAN
Airgas, Inc.
April 2004
<PAGE>
PURPOSE OF THIS DOCUMENT
The purpose of this document is to allow
bonus eligible employees at Airgas,
Inc. to understand the mechanics, measures,
and other design features of the
Fiscal Year 2005 Executive Bonus Plan, and
serve as a guide in the
implementation and administration of the
plan. Included are payout schedules,
specific definitions and terminology, and
basic plan governance.
<PAGE>
AIRGAS, INC. FISCAL YEAR 2005 EXECUTIVE
BONUS PLAN
PURPOSE OF THE PLAN
The purpose of the Airgas, Inc. Fiscal Year
2005 Executive Bonus Plan (the
"Plan") is to align Management's efforts
with the strategic goals of the Company
through competitive annual incentive
opportunities. This plan will be effective
from April 1, 2004 to March 31, 2005 (the
"Plan Year").
ELIGIBILITY
Participation in the Plan is determined by
the functional executive (e.g., CFO,
CIO, Senior Vice President).
TARGET AWARDS
Participants in the Executive Bonus Plan
will be eligible for an annual cash
incentive award (the "Award") based on the
achievement of predetermined goals.
An annual incentive or bonus target is
generally determined based on the
participant's position in the organization,
and can vary according to the
judgement of management.
PERFORMANCE MEASUREMENT
Final Award payments are determined by
adjusting the target award upward or
downward based on achievement relative to a
variety of performance measures,
including: Corporate/Consolidated financial
performance, individual
accountabilities, Operating Company and
Area performance. Depending upon an
individual's position and responsibilities,
these various performance measures,
assessed based on different weightings,
will determine the Award. Performance
measures and weighting have been
established for three categories of
participants: Corporate, Operating Company
Management and Area Managers. Details
are provided below.
CORPORATE/CONSOLIDATED PERFORMANCE
Assessment of Corporate/Consolidated
performance is based on achievement
relative to consolidated:
-
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION
(EBITDA);
-
SALES; and
-
RETURN ON CAPITAL (ROC).
Earnings Before Interest, Taxes,
Depreciation and Amortization (EBITDA) is
defined as revenue minus expenses
(excluding interest, taxes, depreciation and
amortization).
Return on Capital (ROC) is defined as:
1
<PAGE>
ROC = EBITDA - (80% x Depreciation Expense)
- Unleveraged Cash Taxes
--------------------------------------------------------------
Average Capital
Outstanding During the Year
Performance against these measures will be
determined based on achievement
relative to predetermined targets for the
Plan Year, as set forth and approved
by the Governance and Compensation
Committee of the Airgas, Inc. Board of
Directors.
INDIVIDUAL ACCOUNTABILITIES
Individual performance is measured based on
achievement relative to at least one
"line-of-sight" goal in the Plan Year.
Prior to each Plan Year, each participant
will meet with his/her manager to develop
individual performance goals that are
quantifiable (where possible) and are
aligned to the Company's goals and key
financial performance metrics. In addition,
these goals should represent
"stretch" targets that are attainable, yet
challenging.
OPERATING COMPANY METRICS
Assessment of operating company performance
is based on achievement relative to
financial performance goals set for the
operating company in which the
individual works. For the upcoming Plan
Year, financial performance at the
operating company level will be based on
three measures:
- EARNINGS BEFORE
INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA);
- SALES; and
- RETURN ON
AVERAGE CAPITAL EMPLOYED (RACE).
RACE is defined as EBITDA / Average Capital
outstanding for the year. It
represents a return on investment measure
that includes factors under operating
management control.
Performance against these measures will be
determined based on achievement
relative to predetermined targets for the
Plan Year, as set forth and approved
by the Governance and Compensation
Committee.
AREA PERFORMANCE METRICS
The term "Area" can be defined as either a
specific geographic area (group of
branches or sales territory) or functional
area. For the upcoming Plan Year,
financial performance at the Area level
will be based on two measures:
- EARNING BEFORE
INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA);
and
- SALES.
It is recognized that EBITDA may not be an
appropriate measure for Area
performance in all cases. Where necessary,
operating company management may use
a measure that is closely aligned with
EBITDA.
2
<PAGE>
Performance against these measures will be
determined based on achievement
relative to predetermined targets for the
Plan Year, as set forth and approved
by the Governance and Compensation
Committee.
WEIGHTING OF PERFORMANCE GOALS
CORPORATE EMPLOYEES
For corporate employees, Award payments
will be awarded based on the relative
achievement of these goals carrying the
following weights:
<TABLE>
<CAPTION>
CONSOLIDATED AIRGAS
---------------------------------------
EBITDA
SALES
ROC
INDIVIDUAL PERFORMANCE
------
-----
---
----------------------
<S>
<C>
<C>
<C>
50%
15%
15%
20%
</TABLE>
OPERATING COMPANY MANAGEMENT
For operating company management, Award
payments will be awarded based on the
relative achievement of these goals
carrying the following weights:
<TABLE>
<CAPTION>
CONSOLIDATED PERFORMANCE
OPERATING COMPANY PERFORMANCE
------------------------
---------------------------------------------
EBITDA
EBITDA
SALES
RACE INDIVIDUAL
PERFORMANCE
------------------------ ------
-----
----
----------------------
<S>
<C>
<C>
<C>
<C>
10%
50%
15%
15%
10%
</TABLE>
AREA MANAGERS
For Area managers within the operating
companies, Award payments will be awarded
based on the relative achievement of these
goals carrying the following weights:
<TABLE>
<CAPTION>
AREA PERFORMANCE
OPERATING COMPANY PERFORMANCE
INDIVIDUAL PERFORMANCE
--------------------
-----------------------------
----------------------
SALES
EBITDA
SALES
EBITDA
METRIC 1
METRIC 2
-----
------
-----
------
--------
--------
<S>
<C>
<C>
<C>
<C>
<C>
20%
40%
10%
20%
5%
5%
</TABLE>
DETERMINING INCENTIVE PAYOUTS
Achievement relative to these specific
goals determines the extent to which a
participant receives an Award. For
quantitative goals, such as
corporate/consolidated, operating company
and Area financial measures,
performance is assessed relative to
threshold, target, and maximum levels. The
Governance and Compensation Committee has
approved tables that identify
corresponding incentive
3
<PAGE>
payout levels related to threshold, target,
and maximum performance levels for
quantitative goals (see graphs below).
For individual accountabilities a maximum
achievement percentage for any single
g
